A recent case from the Middle District of Florida confirms the trend of the shrinking probate exception to federal court jurisdiction. The “probate exception” prohibits federal courts from interfering with the orderly administration of a decedent’s estate in a state probate court.
The probate exception was squarely addressed in the 2006 United States Supreme Court Case of Marshall v. Marshall, 547 U.S. 293 (2006) involving Anna Nicole Smith and the circumstances surrounding the estate of her late husband, J. Howard Marshall. In Marshall, the United States Supreme Court determined that the probate exception did not bar Anna Nicole Smith’s claim against J. Howard Marshall’s son for the tort of interference with a gift or inheritance, because Anna Nicole Smith’s claim did not involve the administration of an estate, the probate of a will, or any other purely probate matter.
Most recently, in Freeman v. United States Bank, N.A., 2013 U.S. Dist. LEXIS 69680 (M.D. Florida 2013), the federal court relied on Marshall in limiting the scope of the probate exception. Charles F. Freeman, Jr. died in October 2012. Charles’ will is being probated in Sarasota County, Florida. Charles was survived by an adopted adult son, Mark A. Freeman, who is the personal representative of Charles’ estate. Charles’ mother, Margaret, predeceased Charles and had a will with a testamentary trust that made Charles the income beneficiary during his life. After Charles’ death the trust was to be distributed to Charles’ descendants. In the event that Charles had no descendants or spouse, the trust was to be distributed to Charles’ heirs at law.
Mark, individually and as personal representative of Charles’ Estate, filed an action in the United States District Court for the Middle District of Florida. Mark claimed federal jurisdiction on diversity of citizenship, meaning none of the plaintiffs can be from the same state as any of the defendants. Mark sued the trustee of Margaret’s trust (U.S. Bank) and three individual defendants – Lance Brown, Austin Barney, III, and Amanda Barney. Lance is Margaret’s grandson (the son of Margaret’s deceased daughter). Austin and Amanda are Margaret’s great-grandchildren (the children of the son of Margaret’s deceased daughter). Said another way, Lance, Austin, and Amanda would be Charles’ heirs at law if Mark was not Charles’ child. Mark sought a declaration that he was the sole beneficiary of the trust as Charles’ only child, a determination of the rights and obligations of the parties under the trust, and an order directing the trustee of the trust to distribute the trust property to Mark. Mark also sought an accounting of the trust.
After Mark filed the federal action, Lance, Austin and Amanda filed an action in the probate division of Missouri state court seeking a declaration of the rights under the trust and for tortious interference with an inheritance expectancy. Lance, Austin, and Amanda also moved to dismiss the federal action on four grounds: lack of subject matter jurisdiction under the “probate exception” or abstention; lack of personal jurisdiction, insufficient service of process, and improper venue.
The Court found that nothing in the case before it precluded the Court’s jurisdiction in the nature of the probate exception to federal jurisdiction. In reaching this result the Court relied in part on Marshall , discussed above, and Rudman v. Rudman, 2009 U.S. Dist. LEXIS 26533 (N.D. Tex. 2009). In Rudman, the federal court retained jurisdiction of a state court action removed from a probate court. Like Mark, the Plaintiff in Rudman sought a declaratory judgment regarding whether an individual was a beneficiary of a trust and also sought an accounting of a trust.
In sum, because Mark’s claim did not involve the administration of an estate, the probate of a will, or any other purely probate matter, the probate exception did not apply. The Court summed up the shrinking limits of the probate exceptions by stating:
Consequently, as long as the action does not challenge the validity of the will or trust, or the validity of the probate proceeding, then the probate exception does not apply to curtail the federal court’s jurisdiction to adjudicate a claim between parties.